Euro Above $1.3600

September 29, 2010

The dollar is 0.3% weaker against the euro, Australian dollar and Canadian dollar. The greenback also lost 0.2% against the yen and 0.1% relative to the Chinese yuan but edged up 0.1% versus the Swiss franc. Sterling and the kiwi are unchanged against the dollar.

Equities rose 1.2% in Hong Kong, 1.1% in Thailand, 0.7% in Japan, 0.7% in Indonesia, and 0.6% in Taiwan, South Korea, and Sri Lanka. Stocks slid 0.5% in Australia, 0.7% in India, 0.2% in China, and 0.1% in New Zealand. In Europe, the Ftse and Dax are off 0.2% and 0.1%, while the Paris Cac has firmed 0.1%.

The ten-year JGB yield dropped another four basis points to 0.93%. Such was at 1.15% as recently as September 7. The 10-year gilt and bund yields are steady. The three-month euribor rate of 0.886% remains comfortably below 1.0% a day before EUR 225 billion of 3-, 6-, and 12-month ECB liquidity matures.

Oil and gold prices firmed 0.2% each to $76.36 per barrel and $1310.80 per ounce.

The Bank of Japan released results from its September quarterly business survey. The so-called “Tankan” showed improved business conditions compared to June, an expected deterioration by December, downwardly revised investment plans, and some assumed depreciation in the yen. See review.

Euroland’s retail purchasing managers index fell to 48.7 from 49.7 in August and 52.4 in July. The average reading in 3Q10 was the best in 13 quarters, nonetheless. The German, French, and Italian scores each was below 50, connoting a contraction of activity. The German index rose 1.1 points to 49.5. The French index fell 2.0 points to 49.9, and the Italian index declined 2.3 points to 46.0.

China’s manufacturing PMI went up a full point to 52.9 from 51.9 in August and 49.4 in July. Such had averaged 56.4 in the first third of 2010, but officials took subsequent steps to cool growth.

Overall economic sentiment in the euro area improved further to 103.2 in September from 102.3 in August, 101.1 in July and 98.9 in June. Consumer confidence was steady with a reading of minus 11. Industrial sector sentiment and services sector sentiment each firmed a point to minus 2 and plus 8, respectively, while retail confidence and construction sector sentiment went up two points to minus 1 and three points to minus 26. The business climate index rose to 0.77 from 0.72 in August, 0.64 in July and 0.40 in June.

French consumer confidence climbed to minus 35 in September from minus 37 in August and minus 39 in July.

Business sentiment in Italy fell for the first time since March 2009, dropping to 98.4 from 99.3 in August. Italian producer prices in August rose 0.2% on month but 3.5% on year, down from 3.9% in July.

Romania’s central bank left its benchmark interest rate at a record low of 6.25%, which was what analysts were expecting.

The Swiss index of leading economic indicators recorded a value of 2.21 in September, while August’s reading was revised to 2.22 from 2.18 reported at first.

British mortgage approvals fell less than forecast to 47.4K in August from 48.3K in July, and net mortgage lending of GBP 1.66 billion surpassed expectations, too. However, net consumer credit dropped the most in nine months. M4 growth was revised up at tenth to a monthly dip of 0.1% and a 12-month rise of 1.9%.

Britain’s service sector index slipped 0.2% in July and recorded on-year growth of 1.2%. U.K. productivity rose 0.5% on quarter and 1.4% on year in 2Q10. Unit wage costs were just 0.3% higher than in 2Q09, thanks to a 3.9% on-year plunge in the manufacturing sector.

Spanish consumer price inflation picked up to 2.0% in September, most in 22 months. Hungarian producer prices dipped 0.2% on month but accelerated in on-year terms to 9.0% in August.

New Zealand recorded a NZD 437 million trade deficit in August, 2.35 times greater than the deficit in July.

South Korea’s current account surplus in August of $2.07 billion was less than half as big as July’s $5.8 billion surplus. Merchandise exports were 27.7% higher than in August 2009.

South African CPI inflation slowed to a sub-target pace of 3.5% in August. The strengthening rand, which is now at a 2-1/2 year high against the U.S. dollar, continues to be a force of disinflation in South Africa and other commodity exporters.

Today is a light day in the U.S. data calendar, just petroleum inventories. Canadian producer prices and raw material prices get released.

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